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Null points from the Berlin jury

Nick Robinson | 10:50 UK time, Thursday, 11 December 2008

One minute, Gordon Brown says he's saved the world. The next, the German finance minister tells us that Mr Brown is, in fact, saddling "a whole generation" with debt by "tossing around billions" in a "yearning for the Great Rescue Plan" even though "[i]t doesn't exist. It doesn't exist!"

steinbruckSpeaking to Newsweek, Peer Steinbruck goes on to say: "I say we should be honest to our citizens. Policies can take some of the sharpness out of it, but no matter how much any government does, the recession we are in now is unavoidable", before adding that: "[w]hen I ask about the origins of the crisis, economists I respect tell me it is the credit-financed growth of recent years and decades. Isn't this the same mistake everyone is suddenly making again, under all the public pressure?"

Only a few weeks ago, Team Brown was telling us that Germany had proved the case for a fiscal stimulus by unveiling one of its own.

Now, however, we're told that the Germans are resisting calls for an EU-wide stimulus thanks to tensions in the Grand Coalition of parties of the left (the finance ministers from the SPD) and the right (the chancellor leads the CDU) that governs the country. It would be surprising if there were not tensions, not least with elections in Germany next year. However, there is one problem with this theory. Chancellor Merkl told her party congress this month that: "[w]e will not take part in a competition to outdo one another with an endless list of new proposals, in a senseless contest over billions".

Now, there are other theories being offered, too:
• having just suffered politically by raising VAT, the German government doesn't welcome comparisons with Britain where it's just been cut;
• the Germans fear that they will, as ever, be expected to foot the bill for any EU-wide stimulus;
• they have bad memories of the G5's Bonn summit in 1978 when they felt bullied by America to adopt an expansionary growth package which later fuelled German inflation;
• they have even worse memories of the rampant inflation which helped to create the conditions which led to the rise of Hitler.

There is, dare I suggest, another perfectly plausible theory. Mr Steinbruck believes what he says and does agree rather more with Mr Cameron than with Mr Brown, even though they come from the opposite ends of the political spectrum.


Page 1 of 6

  • Comment number 1.






  • Comment number 2.

    Yes, publicise this more. It is right on the money.

    Let's hear it for common sense.

    Have to say it again, watch for the hustling and jostling by Brown, during or after the festive season when spirits are high, to push us into the Euro.

  • Comment number 3.


    The cholera problem is sorted

    What does Brown say?


  • Comment number 4.

    A politician who changes his mind every day and never says what he does or does what he says...

    Steinbrunck and Cameron seem ideal political bedfellows!

    -Germany has raised VAT!
    -Germany has pumped £300m sterling equivalent in to recapitalising the banks
    -Steinbrunck is at odds with the right wing of his coalition....

    Best check Camerons ancestry....he and this buffoon must be related...

    Do nothing Dave and Nein Nein Nein Peer...

  • Comment number 5.

    Will Brown ever LEARN???




  • Comment number 6.

    Brown is playing double or quits. If he succeeds, the recession will be a bit less bad than it might otherwise have been. If he fails God help us all.

    But the real problem is not that UK PSBR is excessive, or will be even after the stimulus. Rather, individuals and the banks are hugely over-borrowed. With hindsight, UK Government should have prevented the banks securitising their debts. Trouble is, this would have been presented by the Conservatives as unwarranted interference, would have held down house prices (a good thing in retrospect), and would have led to Labour being voted out of office. So we face a long period of depression while these huge debts are paid off. Something like a trillion pounds of credit has to be taken out of the economy, permanently. It is the collective fault of all of us (individuals and banks) for over-borrowing in the first place.

  • Comment number 7.

    Nick..thanks for a good piece..and to quote you....

    "There is, dare I suggest, another perfectly plausible theory. Mr Steinbruck believes what he says and does agree rather more with Mr Cameron than with Mr Brown, even though they come from the opposite ends of the political spectrum."

    Would you care to honour us with your analysis of why Mr Steinbruck might be more on the side of Camerons thinking?

    Could this be a subtle acknowledgment of yours that Brown just might be wrong?

  • Comment number 8.

    The really sad thing is that Freud was right. In the heat of the moment, Brown DID say what he really really believes.

    Can the draconian powers of this government's Mental Health Act be applied to itself?

  • Comment number 9.

    With Germanys social welfare costs due to unification it is no surprise that they can't afford to add to the already £300bn they have given the banks.

    No wonder they are hacked off about VAT reduction etc, they can't afford it and will be under pressure from their electorate to mirror measures taken by the rest of the world.

  • Comment number 10.

    Brown is indeed taking a big risk, but the polls have consistently suggested that the public trusts him over Cameron. That has to count for something.

  • Comment number 11.

    Steinbrook's quite correct, and many on the left who are cheering Brown's action are doing so out of genuine ignorance or political affiliation rather than actual concern of the future of the UK.

    The German's themselves have had to bail out their banks, but they're starting to realize that trying to halt the collapse of the debt mountain with more debt isn't just delaying the inevitable, but is downright senseless.

    Whats worse is Browns stimulus package was drowned out by the price cuts already having to be made, thus making it useless from the get-go.

    Sterling is dropping, investors aren't terribly interested in buying our debt and we're pushing close to losing our credit status.

    At a time we need real statesmen, it appears that all three parties can only bring forth economic lightweights.

    Browns political obituary will be one of dithering, ineptitude and a capacity for honesty on a par with Jeffery Archer.

  • Comment number 12.

    7. Cannot and will not let his personal political thoughts colour his professional or personal life. He HAS to be seen to be impartial.

    It's no use anybody trying to wheedle anything out of him like that.

    He is a professional journo. - top of his tree.

  • Comment number 13.

    What's interesting about this is that the outspoken nature of this attack on Brown's policies was seen as against normal diplomatic protocol.

    This implies that there could be a great deal more politicians that disagree with McIdiot but who are hiding behind diplomatic niceties.

  • Comment number 14.

    All our collective faults?

    Surely not? Was it not the conservatives who masterminded the big bang in finance, was it not Brown and Co who watched as bank after bank increased mortgage availability to unprecedented levels?

    Yes, we are all in trouble, but of the available culprits, Brown and the bank excecutives are wholey to blame.

  • Comment number 15.

    Herr Steinbruck is absolutely, 100%, definitely, right. Thank God a politician somewhere has the courage to say it.

  • Comment number 16.

    Brown has done an enormous U-turn rendering his credibility a serious blow.

    His policies are based on hot-air that even he probably doesn't even believe in his heart of hearts. He is just enjoying his "Superman" image following the battering he deservedly got before the collapse of Goldman Sachs etc.

    But he is living on borrowed time, both metaphorically AND financially.

    Steinbruck is talking sense.
    The UK should listen.

  • Comment number 17.

    I am so fed up with hearing posters make comments about how 'we all' over borrowed...lived beyond our means...didn't save...etc etc.

    A lot of us don't have large debts and have actually saved...and are now being kicked in the teeth.

    But basically...who would you rather believe...those who run the German economy...or those who run the British economy?

  • Comment number 18.


    Well done

  • Comment number 19.

    The Germans think very differently to us as regards the economy. They don't do debt, meaning they don't borrow money knowing they can't pay it back.

    100% mortgages were not available in Germany and credit cards are used by very few people. The saving rate per household is good (approx 12%) and rising, and current account surplus is expected to reach 6% of GDP this year.

    This is why Germany is much better placed to get through this than the UK, and why their Finance Minister has reacted in the way he has.

  • Comment number 20.

    Peer's talking down the economy.

    Given that he's resident abroad and this action could conceivably be "to the detriment of the UK economy (or part of it)", shouldn't we issue a freezing order on all his UK assets? I suppose, being a finance minister in Germany, we could possibly freeze all of Germany's UK assets.

    Good old anti-terrorism legislation!

  • Comment number 21.

    Or maybe this is just an example of our German friends engaging in some hard-nosed, cold-hearted and economically-detailed consideration of the Brown/Darling 'plan'. Something most financial commentators in the UK have chosen, for perhaps political reasons, not to do.

    The Brown/Darling plan is deeply flawed. The use of VAT as a means of stimulating the economy is faintly ridiculous. As Vince Cable said, the Government should have invested directly in capital projects (affordable homes, power stations, railways, etc.) to create real jobs and to reinforce core sectors of the economy. And, because land prices are currently so depressed, these capital projects would probably yield a profit for the exchequer in the long-term. Consumers are looking for 25 to 50% discounts before committing their discretional funds. A cut in VAT will strip revenue from the exchequer but will never stimulate a compensatory demand. Just a dumb idea.

    As for the state of the British finances, just look at the freefalling pound to get another sober view of the Brown/Darling plan.

    But should we be surprised. Of course not. Gordon Brown is the longest serving finance minister (as Chancellor and PM) in all the major economies. He had sight of all the financial data that, as Robert Peston has detailed, clearly signposted the dangers of the credit-financed growth. He saw the data and did nothing to protect this economy and the world trading system.

    Gordon Brown has many faults but, this abdication of his own responsibility is unforgivable.

    The Brown/Darling plan is a bad and very dangerous botch job. It isn't even true to the Keynesian principles, as Labour are claiming. All credit to Herr Steinbruck for speaking the truth.

  • Comment number 22.

    To quote Brown on LBC in response to the German 'attack'...

    "The important thing is that almost every country around the world is doing what we have been doing."

    How many times have we heard this?

    I would like to see a list of ALL those countries that have adopted Browns solutions,so we can see whether he is telling the truth ,or not.

  • Comment number 23.

    Mr Steinbruck is drawing a critical distinction which often seems to go unnoticed.

    On the one hand, preventing a banking collapse is a legitimate and vital step; the money injected is in the form of debt or equity, which the taxpayer should ultimately recover.

    On the other hand, however, injecting "fiscal stimulus" by using massive increases in debt is almost certainly futile, and will saddle future generations with huge debts, higher taxes and lower standards of living.

    So Mr Steinbruck is right to draw this distinction, and Mr Brown is wrong to ignore it.

    Ironically, the news that MoD may delay the construction of the new aircraft carriers seems bizarre - this is just the kind of capital programme that could actually help an important part of the economy!

  • Comment number 24.

    Steinbruck is spot on - we will be paying for Brown's profligacy for a generation, possibly longer.

    Why did the BBC originally report this as 'Germany is Out Of Step' - the BBC should be more objective and not spin this - the truth is Steinbeck/the Germans are right and Brown is incompetent and wrong.

    The Germans are out of step in the same way that a sane man in a lunatic asylum is out of step (sorry, no offence meant by the words lunatic asylum - is hospital for those suffering from mental disorders more pc?)

    If devaluing the currency made a country more prosperous then Zimbabwe would be the richest country in the world.

    How long will it be before Brown starts printing extra zeroes on our banknotes so that we can all pretend we are 'millionaires'?

  • Comment number 25.

    12....I was being rather sarcastic,as I suspect were you!


  • Comment number 26.

    I am shocked that this is even being reported.

    It is obvious from the financial markets what the worldwide opinion of Mr Brown and his policies are.There is only himself that thinks we are in a good position and that he is the man for the job.....

    To carry on he needs the backing of the people and that takes an election in May he will be shown what is thought of him all you Labour Euro Mp's should start selling your second and third homes because you will probably be out of a job come Mid May.

  • Comment number 27.

    How dare Steinbruck show such insolence to World Leader Brown. Everyone should (blindly) follow Brown's lead (like Lemmings). We all know that Britain is best positioned to recover from the downturn quickest - we only have the largest personal/consumer debt in the Europe and now public debt is also soaring:

    The Centre for Economics and Business Research report said: “The UK is poorly placed due to the high levels of consumer debt and reliance on the consumer sector. In addition, government finances are in a poor position heading into the recession, with the public-sector deficit reaching a new record of around 6 per cent GDP in 2009/10.”

    Downing Street retorted that Germany is out of step, as if they expect Germany to follow their lead. They might be out of step because they may realize they shouldn't go down the same dead end as the UK.

  • Comment number 28.

    #4 greatandydudley

    For the sake of explaining the obvious point you have missed, Germany are not planning to borrow £500bn to saddle the next 3 generations of this country with a huge debt.

    Germany will be laughing in the future, while we're paying interest monthly to the Saudis and Chinese.

    You really are a bit of a naif aren't you....

  • Comment number 29.

    This is Keynsian vs Austrian economics.

    Gordon thinks he can spend his way out of debt. Right. Like eat your way out of obesity...

    The printing and spending is what got us into this mess. So printing and spending can scarcely be considered the cure.

  • Comment number 30.

    If we are heading towards a slump (as most economists agree) trying to 'balance the books' will be a road to mass unemployment; which will turn a deep recession into a depression.

    As Germany is an exporter isn't in it's interests to help keep other economies afloat?

  • Comment number 31.

    Who is Steinbruck saluting in that picture?

  • Comment number 32.

    Nick says

    There is, dare I suggest, another perfectly plausible theory. Mr Steinbruck believes what he says - - - .

    A politician who believes what he says ???

    Blimey, Nick, what kind of spin is that ?

  • Comment number 33.

    For weeks 'Flash' ..... aaaahhhh has been telling us the tories are on the wrong side of history. Well Mr Bean now who is wrong? CALL AN ELECTION AND LET THE PEOPLE DECIDE.... the big old cluncking baffoon or Cameron and his 5 points of how to get lending moving... oh yes, just last week one of ur backbenchers asked him for 5 points on what he'd do. and pleanty of people have said he's right. The british government isn't her to save the world it's here to work for British people..... remember that MR BROWN

  • Comment number 34.

    I suppose this analysis deserves some scrutiny before the NuLabour Spin machine tries to bury it in vitriol

    ...and are you implicitly suggesting that Cameron is indeed "going to do something"?

  • Comment number 35.

    To be pedantic, the German hyperinflation was in the early 1920's, not the 1930's (when the issue was massive unemployment and deflation) and its link to Hitler's rise was complex and indirect.

    The inflation really got going when the German authorities began financing payments to workers striking against the French occupation of the Rhineland to enforce the payment of war time reparations by simply printing money. It ceratinly wiped out the savings of substantial sections of the German middle classes and shook their often already tenuous faith in the new democratic republic's ability to manage serious crises. In the long run this probably translated into votes for the NSDAP when times got hard again, but the linkage is less clear cut than is sometimes suggested.

    It does however seem to be the case that the mainstream German political elites now firmly believe that the linkage did exist, that many in the German electorate share that belief and that this shared belief is important in shaping what "credible politics" looks like in Germany.

  • Comment number 36.

    I believe that it now costs twice as much to insure a UK bond against default than one issued by McDonalds.

    How on this earth can anyone believe that we are well places to weather this recession when the markets rate a burger bar as a safer bet??

    A very interesting piece in the Telegraph today...

  • Comment number 37.

    ROFL - twice in two days, Nick must be after a job in comedy!

  • Comment number 38.

    As John Redwood (see his website) pointed out (to be derided by Brown in the house) we need to accept lower living standards. Any country running an external deficit (perhaps to fund a government deficit, the "twin deficits problem") must eventually accept it will have to repay. In real terms, that means a lower standard of living. It can be achieved by a lower valued currency, and so higher prices, as long as the loonions do not seek pay rises to compensate.

    Perhaps Steinbruck is simply defending the German decision to inject a relatively small amount into its economy (compared to other nations) and just become a free rider on other countries (which by boosting their own economies will increase imports from Germany and so boost its economy).

  • Comment number 39.

    Peer Steinbruck goes on to say: "I say we should be honest to our citizens. Policies can take some of the sharpness out of it, but no matter how much any government does, the recession we are in now is unavoidable",

    * * * * *

    Leonard James Callaghan, Baron Callaghan of Cardiff, KG, PC (27 March 1912 – 26 March 2005), Prime Minister of the United Kingdom from 1976 to 1979 and leader of the Labour Party from 1976 to 1980.

    “We used to think that you could spend your way out of a recession and increase employment by cutting taxes and boosting government spending. I tell you in all candour that that option no longer exists, and in so far as it ever did exist, it only worked on each occasion since the war by injecting a bigger dose of inflation into the economy, followed by a higher level of unemployment as the next step.”

    Labour Party Annual Conference Report 1976, page 188.
    Speech at the Labour Party Conference, 28 September 1976.

    * * * * *

    It is sad that Mr Brown has failed to learn from the past and dismisses the view’s of the German Finance Minister with such petulant arrogance.

  • Comment number 40.

    "Doing nothing" is preferable to "doing something" when the doing something will ruin our economy for the next 50 years.

    It really is a shame that Labour apologists will toe the party line even if it means putting the country in hock to two of the world's most repressive regimes for the next half century.

    Contrary to the #10 spin machine, Gordon is not our saviour. The man is a few shillings short of a pound, and due to this failings, this country will have an insurmountable debt for the forseeable future.

    I mean Darling thinks we'll be out of recession by the summer. What planet is he living on?

  • Comment number 41.


    Can we have a list of all the other countries that are borrowing on the never-never to get out of this debt-induced crisis?

    I think we'd all like to see it, as you keep parroting what Mandelson tells you.....let's see the FACTS.

    So, we know Germany isn't one of them. Is the list going to consist of countries like Zimbabwe?

  • Comment number 42.

    Just like his views on euthenasia GB & AD are trying to stop the inevitable. It won't work. Nothing will stop the impeding storm.

    The best they can do is try and make it more bearable for people whose lives will be broken and whose homes lost.

    This is what they should be doing.

    Cameron hasn't got an inkling about this - he, and much of his party was born with platinum spoons their mouthes and cannot really relate to what a recession/ unemployment really means to those who have nothing.

  • Comment number 43.

    "There is, dare I suggest, another perfectly plausible theory. Mr Steinbruck believes what he says and does agree rather more with Mr Cameron than with Mr Brown, even though they come from the opposite ends of the political spectrum."

    He might just be correct, that would put the BBC in a spin.

  • Comment number 44.

    Never thought I'd say it, but thank god for the Germans!!

    The more contrary opinions there are to Crash's economic 'policy' the better.

    I dont want my grandchildren to be taxed to oblivion in order to pay fo one mans ego and delusions of grandeur.

  • Comment number 45.

    Your either do something in the hope it helps the situation or you sit back and let it ride its course!

    These sort of comments only go to harm the confidence the economy needs. What possible good can come out of saying such a thing?

    Peer Steinbruck has no more an idea what is best and what will happen in the future than averge Joe on the street.

    However what is known from preveous recessions is that if you do nothing it can be very bad indeed.

  • Comment number 46.


    "But basically...who would you rather believe...those who run the German economy...or those who run the British economy?"

    Erm, easy question. Those who run the German economy. Those who run the British economy are either mentally not fit-for-purpose, or are so desperate to preserve the careers, they will nod in agreement with whatever Superman says.

    Germany actually HAS an economy - they make things. We do not. Our economy is based on financial services. This area is going to be contracting greatly. We have nothing to fall back on.

    So, again, I would trust the Germans over a Labour government here. Labour's track record is clear: Ramsay MacDonald, Attlee, Wilson, Callaghan, ....

    We all know how they left the country....

  • Comment number 47.

    The reason nobody's doing any serious work is it's all water off a duck's back, and by the time we can get rid of the oiks, the UK will be history, endebted beyond any hope of recovery, because we bailed out the US rather than insististing they stood by their fraudulent valuations of dodgy housing stock.
    OK, there's dodgy valuation been going on here too, but not to the extent HMG's got us into hock to.
    As Rabbie Burns said, we've been bought and sold by English - strike that, make it Yankee - gold, what a parcel of fools in a Nation.
    After all, it takes one to know one.

  • Comment number 48.

    "There is only himself that thinks we are in a good position and that he is the man for the job....."

    No, there's Nick Robinson also.

  • Comment number 49.

    And there we have it - the truth:

    There is, dare I suggest, another perfectly plausible theory. Mr Steinbruck believes what he says and does agree rather more with Mr Cameron than with Mr Brown, even though they come from the opposite ends of the political spectrum.

    Deal with it Labour.

    Sending up Ministers to tell us Gordon's plans are "The right thing to do" is not a justified counter criticism of the German perspective.

    Neither Gordon Brown or Ed Balls seem able to defend the UK's stance and expand upon the benefits of the approach adopted by the UK.

  • Comment number 50.

    What colour shirt goes with Brown trewsers, Maggie? Ach, so...

  • Comment number 51.

    And there we have it - the truth:

    There is, dare I suggest, another perfectly plausible theory. Mr Steinbruck believes what he says and does agree rather more with Mr Cameron than with Mr Brown, even though they come from the opposite ends of the political spectrum.

    Deal with it Labour.

    Sending up Ministers to tell us Gordon's plans are "The right thing to do" is not a justified counter criticism of the German perspective.

    Neither Gordon Brown or Ed Balls seem able to defend the UK's stance and expand upon the benefits of the approach adopted by the UK.

  • Comment number 52.

    And there we have it - the truth:

    There is, dare I suggest, another perfectly plausible theory. Mr Steinbruck believes what he says and does agree rather more with Mr Cameron than with Mr Brown, even though they come from the opposite ends of the political spectrum.

    Deal with it Labour.

    Sending up Ministers to tell us Gordon's plans are "The right thing to do" is not a justified counter criticism of the German perspective.

    Neither Gordon Brown or Ed Balls seem able to defend the UK's stance and expand upon the benefits of the approach adopted by the UK.

  • Comment number 53.

    Not much from the labour luvvies yet, waiting to hear the spin they put on these comments

  • Comment number 54.

    24. Good analogy!

    All Brown's stimulus will do is create debt and run the risk of higher inflation. The U.S.A. can better afford such a course of action as it is a far bigger economy and has a much more diversified industrial base than Britain. The German's don'y like Brown's agenda as, as Nick rightly points out, they know all to well what runaway inflation can lead to.

  • Comment number 55.

    Surely someone can announce via the media (Littlejohn most likely) of a protest rally outside Parliament to DEMAND this government of fools resign and new elections are held. If the Greeks can do it why not us?
    End of wish.

  • Comment number 56.

    Sorry - my thoughts appear to have been posted multiple times - some sort of techno glitch

  • Comment number 57.

    Moderators showing they can't count again....please moderate in order!

  • Comment number 58.

    Brown, Darling et al are just incredibly stupid. Borrowing too much put the country seriously in the poo. Borrowing more is only going to exacerbate an already perilous situation.

    If his policies enjoy worldwide approval why is sterling dropping like a stone? The answer is blindingly obvious to all but the numpties who run our country.

    Brown was the worst Chancellor the UK has ever had. Darling is just his puppet and is intellectually wanting. All this shower of incompetents do is utter mindless sound-bites. They are beyond contempt.

    Time for an election and pronto!!!!

  • Comment number 59.

    exactly what do you do Mr Robinson?-you don't make anything, you don't help anybody, you don't report news but opinion and innenuendo. Are you not one of many who should have been cut in the cost saving that is needed in the BBC to provide good quality and honest productions. And yet you appear on so many programmes with no real input other than what you think. I would perhaps listen to what you have to say if it had any value. Perhaps just now youhad your ilk have had their time and should go and get a real job which actually contributes something of worth to society-you actually cost people jobs and livelihood and there are a number of people who I spaek to are actually beginning to question your worth and contribution! I do wonder whether this will actually be allowed to be posted.

  • Comment number 60.

    Well there is a silver lining, for me at least.

    Flying to Hong Kong to spend Christmas and New Year with my brother and anglo Chinese family. I bought the tickets well in advance which was a piece of luck as I was made redundant soon after.
    But at least I now know that if a wing or engine falls off "SuperGordon" will appear and save the plane.

    Brother has been in Hong Kong since 1978 and I have visited as often as I could afford (which has not been that often) but the HK Dollar is now about 11.48 to the Pound. I have never known the Pound soooooo low!!!

  • Comment number 61.

    Sounds to me like the Germans are being honest and cautious in the face of the crisis. If only our leaders showed us the same respect.

    I await with bated breath for all the usual apologists to come along and tell us their usual lies about the Germans are perpetuating the crisis by "talking the economy down" and how the Tories are a "do nothing party"

    I dream of one day having reputable and honest people in Westminster willing to do the right thing for the people rather than the right thing for themselves.

    Naturally I hope to high heaven that our economy doesn't go down the pan but to suggest that anyone who doesn't blindly accept Gordon's version of events is part of the problem is a truly despicable tactic from NuLabour, not that anyone should be surprised of course.

  • Comment number 62.

  • Comment number 63.

    Why do you "dare" to suggest?
    I know it's only a turn of phrase but using it suggests that you are afraid of the consequences of what you say.
    Could it be that you are slowly starting to realise that the route Brown is taking us down is not just wrong, but dangerously so?

  • Comment number 64.

    Congratulations to Herr Steinbruck.

    Incidentally, more a Monetarist than a Keynesian, rightly so. Germany has been cutting direct taxation for many years switching to consumption based taxes instead.

    I have said it, many people here have said it.

    You cannot borrow your way out of recession.

    It never, ever, ever offers a medium to long term solution to economic slowdown or recession.

    With Sterling heading for Euro parity, interest rates at 2% (below the ECB), all those Treasury bonds are suddenly not looking such a great bet.

    Which means forget 2% interest rates, they will have to rise to make UK debt attractive to hold for investors.

    Exactly what happened in 1976-79, Callaghan's government had to hike rates to 15%.

    We could, like Germany, manufacture and export our way out of this.

    Only Gordon's policies have had manufacturers lose 1,000,000 jobs since 1997, big names have gone bust, others close down or downgrade their presence in the UK.

    Because it's too expensive to do business in the UK thanks to Gordon's taxes.

    Brown's policies are wrong.

    We all have to cut our cloth accordingly, there is no free lunch for any industry, public or private.

    1. Cut government spending.
    2. Cut personal and business taxes.
    3. Slash red tape and regulation.
    4. Eliminate Waste.

    UK plc has to become more productive and more business friendly.

    And we have to live within our means.

  • Comment number 65.

    Well here we re again folks writing miles of complaint about what is wrong or sometimes right but offering nothing towards the debate as to how to resolve matters for the future.

    Is it to difficult, or is it to horrific to unpopular to even debate the solution its certainly a lot easier to do nothing.

    Problem is doing nothing will give more space to anarchy (see Greece) of course you can lie that you have the answer that will delay anarchy (see Zimbabwe).

    If you want the indicator of who is on the right economic track and who is on the wrong tack take a look at the Dollar the Pound and the Euro.

    We can not become a manufacturing exporter in hard economic times because basic products can be produced and distributed in the Far East, Eastern Europe, Africa and India and until we get back to world wide growth we will not be able to export our high value technology and service products.

    In short we would in the West have been better of rather than give our money to our banks to have distributed it among the poor of eastern Europe and South America they would have then spent it on buying essentials food, warmth clothing ( basic Maslow’s hierarchy of needs) so improving their position.

    That would have improved the wealth of the middle economies Russia China India etc who would then have bought our hi-technology from which we would earn money.

    We may be a nation of shop keepers as one prominent European once accused us but given Woolworth’s position maybe not for much longer and we are nolonger the industrial power or basics for life manufacturing nation we were, no solace there then.

    The banks will never earn anything for us again, only earn from us, until they can build a new false economy and that is going to be a long memory away from now.

    Sadly blogs are turning the pen from being mightier than the sword to being a blunt penknife folded neatly away even more effective than the police are being in dealing with knife crime.

    There that’s most of today’s news dealt with in a few short lines but to what avail.

  • Comment number 66.

    The country is entering recession.

    We have some of the highest levels of both personal and public debt in the developed world.

    Imagine we reduce this to a microcosm of one family, deep in debt. They need to spend to survive - heating, food, etc...

    What do they do?

    Tighten their belts and focus on the necessities?

    Or go and get a shedload of credit cards, continue to buy plasma TVs, and other luxuries, knowing that they'll have to pay it all back someday?

    I think most people would choose the first option. (Or perhaps not, as Brown has had his boom in this country by encouraging people to have unmanageable levels of debt....he is after all only following his own advice).

    "There will be no return to Tory boom and bust" - Gordon Brown, talking out of his posterior yet again.

  • Comment number 67.


    What are talking about? as if Germany has an excellent record on avoiding recessions or getting through them quickly!

    Germany is already in recession adding that to the one in 1996 that would mean they have had two in the space of Britain is still not defined as having one yet!

  • Comment number 68.

    Good post Nick. Am I the only one to notice an absence of Labour supporters attempting to disprove?

  • Comment number 69.


    You missed the most important bit of the article:-

    It doesn't exist. It doesn't exist! Dealing with an unprecedented crisis is a puzzle, a trial-and-error.

    Brown built his (aparant) credibility on making plans and predictions, and then months later appearing to have been right.

    He generally did this by wording his plans and predictions in such a way that whatever happened (within reason) he could claim that it is what he expected all along.

    This is also contributes towards labour being considered liars in all but name.

    However Brown has now painted himself into too many corners - he can't admit that it is best to work it out day by day, he is committed to having 'master plans', and committed to going through with them even when they turn out be wrong.

  • Comment number 70.

    Here's the Economist's view:

    "With the housing-market boom unsustainable and mounting structural flaws—such as a dearth of skilled workers, a pension system that needs reform, and a lack of innovation—Britain's economic prospects look less bright. September 2007 saw Britain's first bank run in decades and in February 2008 the government nationalised Northern Rock, the bank that collapsed. Mervyn King, head of the Bank of England, is predicting a “marked slowing of growth” and “very weak” consumer spending in 2008 as inflation rises. "

  • Comment number 71.

    The Germans are offended by being sucked into the Brown and Mandelson dishonest media spinning process.

    They know Mandelson better than we do.

  • Comment number 72.

    Some more views from the Economist....

    "The governing Labour Party is bereft of ideas and direction, with the embattled prime minister, Gordon Brown, unable to exert his authority in the face of growing party indiscipline and the likelihood of an economic recession"

    "The economic outlook is deteriorating rapidly. The Economist Intelligence Unit expects GDP growth to slow to 1% in 2008 and to contract by 0.2% in 2009."

  • Comment number 73.

    Hi Nick,

    I really feel obliged to point out a major factual error in your blog. The 'rampant inflation' within the Weimar Republic took place in 1922 and 1923.

    I should be surprised that you didn't know this. Unfortunately, the UK's education standards appear to be going down the drain. My university friend Gavin now lectures a course on Nazi Germany and he thought it happened in 1929?!?!?!?!?

  • Comment number 74.

    and balhamu hasn't got a clue how to answer this one has he?

    Probably phoning the BBC right now to try get this post removed for favouring the tories.

    Tough luck..the truth is out there and it's not spending more money to get you out of a problem caused by spending too much money.

    As if we needed to be told.

    So the next time Gordon Brown pipes up with his boasts about the world following his example the crowd will shout "oh no they're not!"

    Call an election

  • Comment number 75.

    'Big Government' plans to pump the world's economy up with made-up money. Wasn't it made-up money that helped cause our economic problems in the first place?
    If I shot myself in the foot I wouldn't shoot myself in the other foot to make it better.

  • Comment number 76.

    13. Jonno_79

    Thats a really good point.

    Given that brown keeps insisting that the rest of the world is following his 'plan' -- I wonder why Nick isn't speaking to some of the 'rest of the world' about this.

    Maybe he anticipates his paymasters not liking what they will hear...

  • Comment number 77.

    Heritage Foundation in the US:

    "The financial crisis certainly is serious, but Mr. Brown's suggested solutions would, for the most part, do little to prevent future crises; on the contrary, they could do great harm."

  • Comment number 78.

    I think we should call Ocean Finance to consolidate our debts and get an easy to manage single monthly payment. Britain probably isn't credit worthy enough to go to IMF any more.

  • Comment number 79.

    Just stopped eating my lunchtime boil of soup. One of your colleagues in Brussels is saying the the British are angry that a German minister has publically said that Brown's policy is wrong and that such disagreements should be aired in private.

    Has the US government complained about Brown always saying that the only reason the UK economy is in trouble is because of the US problems??

    back to the soup before it gets cold

  • Comment number 80.

    We will be back in the '70s. Anyone here remember the original (and best) 'Aufweidesen Pet'?

    Situation comedy about a group of Btitish builders having to work in Germany and living on-site in portacabins because there was no work at home, it was based on fact. I knew lots of people doing the same at the time.

    And here we go again... message for all you likely lads... get a German/English dictionary and start some German classes. You'll be needing them rather soon.

    I'm grateful to Herr Steinbruck for pointing at the Emperor' s new clothes. Shame on the BBC for not doing so.

  • Comment number 81.

    Irwin Seltzer in the Telegraph today says;

    "None of this is to deny that developments in an economy as large as America's have an impact on its trading partners and other countries. Or that America's bankers mismanaged risk. But it remains an incontestable fact that the Prime Minister is pointing a finger at America to conceal his mishandling of the British economy and, lately, the futility of some portions of the stimulus package he has crafted. Gordon Brown's search for a villain might better take him to the nearest mirror than to Washington, DC."

    Oh dear, can it be true? Did Herr Steinbruck read this article and say, "At last some common sense. Why are we following this madman Brown?"

  • Comment number 82.

    At least another generation have now been educated as to why not to vote for Labour!

    Even the scroungers are getting upset now that their free money is being taken away.

    Roll on the general election.

  • Comment number 83.

    Brown is indeed taking a big risk, but the polls have consistently suggested that the public trusts him over Cameron. That has to count for something.

    Chris leopard

    And that makes him right - this is the same live in the moment public that have over extended themselves in the past decade and are now quite happy to borrow against their childrens future income as well - No doubt in 20 to 40 years time they'll also be whinging about why they dont have a pension worth talking about.

  • Comment number 84.

    Do our anti-terrorism police have a remit to operate in Germany??

    Peer Steinbruck needs to be a bit careful, if they do...

  • Comment number 85.

    I've been telling you this for months, Nick.

    Brown/Labour/BBC are the only people who believe/peddle Brown's "I am the messiah" message.

    All other countries have been openly criticising/ridiculing Brown and they've all been saying for months that his "plans" are stupid and dangerous. But for some reason the BBC haven't been reporting on what the other countries have been saying.

  • Comment number 86.

    @56 Jonathan_Cook

    lol, I just assumed you were trying to use repetition to make the labour apologists understand!

  • Comment number 87.

    What everyone has to understand about Brown is that he wants to win the next General Election. Do people really think he would be so irresponsible with the public finances, if he had won the phantom election of autumn 2007? Of course not!

    In short, Brown does not give a fig about the UK economy in two years time - he only cares about the short term and his election prospects. That is why he is saddling the future with such calamitous and reckless policies now.

  • Comment number 88.


    Funny i was censored for daring to suggest

    BROWN looked in the mirror.

    Good on the TELEGRAPH/Seltzer.

  • Comment number 89.

    "10. At 11:29am on 11 Dec 2008, chrisleopard wrote:

    Brown is indeed taking a big risk, but the polls have consistently suggested that the public trusts him over Cameron. That has to count for something."

    Where are they taking these polls? Inside a labour club during happy hour?

    I live in a formerly industrial northern town. Pure working class labour territory, in fact voted most working class town in the UK recently. Even here Brown is hated.

  • Comment number 90.

    Finish my soup now.

    Another news item. Nick another of your colleagues is reporting on the delay to the two aircraft carriers. I thought one of "SuperGordon's" policies was to bring forward public spending (its a another question where the money will come for but I leave that to those cleverer than I). To bring it forward maybe save jobs at the yards or at least secure them and in the Royal Navy.
    Is "Super Gordon" speaking with forked tongue (sorry a US expression and as he says its all their problem)

  • Comment number 91.

    Sarkozy is playing a clever game: Brown has the central bank within the country, Sarkozy has not. If Sarkozy manages to tempt the Germans into trying to spend their way out of recession, the Germans will also have an interest to let inflation move up because higher inflation reduces the debt-to-GDP ratio.

    The risk and harmful effects of higher inflation are substantial: in 1956, the UK's debt-toGDP ratio hit 146%. A basket of goods priced 10 pounds in 1956 costs 180 pounds and 49 pence now. Comparing this inflation with Switzerland, where debt has been relatively modest into the 1990s, demonstrates why the Germans prefer to keep the lid on government spending. The Swiss are paying 42 francs and 41 centimes now for a goods basket that set them back 10 francs in 1956.

    And sterling? Well sterling converts into 1.77 francs today compared with 12.2 francs in 1956.

  • Comment number 92.

    Dear Nick,

    I am off to visit my grandchildren this weekend and look forward to reading them stories about how they will have to work until 70 to pay off all this debt.

    Any news about my question yesterday about sterling's near parity with the Euro.
    Is it still buried too deep on the BBC?

    Come to think of it, Robert Peston stopped treading on your territory, so why not return the favour and ask your sources?


  • Comment number 93.

    Just look at the currency markets, rather under reported these days, as they tell you how "good" Gordon's plan is. The £ heading for parity with the euro, unless some of the even more heavily indebted European states like Greece, Italy and Portugal implode. Seems the markets rather agree with Steinbruck's restrained analysis.

    Perhaps Gordon should read Galbraith's book on the 1929 crash and the role of the easy credit available in 1928 and 1929 in the maelstrom. Gordon should realise that when you have a lot of debt to start with adding more to it really doesn't help, other than to defer for a very short period, the inevitable reckoning. So much for Prudence. Hey ho.

  • Comment number 94.

    Is anybody else seriously considering emigration? This country is a mess culturally, politically and now economically. I've nearly had enough and think it's time to get out!

  • Comment number 95.

    I don't essentialy think that this argument boils down to "Labour is wrong/Tories are right" in any particular sense, there are two arguments to look at.

    Both parties have differing points of view over what should be done to help the economy. I personally am not enamoured to any political party in any way; but I do believe that we should not throw money into a seeminlgy bottomless pit without counting what the future cost is. I do think that Labour has got it wrong, I also think that the Tories need to do a little more than just point out that Labour may be going in the wrong direction (although this is part of the remit of being the opposition!)

    I don't think it is at all sensible to try and borrow vast amounts of money when our economy isn't in a strong enough position to start with. I firmly believe that there is enough money that can be saved inside the public purse already - it just needs to be allocated in better ways. We don't need to borrow more; we need to look at what we already have and then get rid of the waste (of which there is plenty) and cut down on expenditure that is not actualy needed.

    I realise that all governments will singularly fail to do this, but I think it is possible and achievable if we put our minds to it. Pointless funding of quangos and or non-essential services needs to be reduced. This can be restored when times are better, but for now it needs to go. We as a nation have far more important issues that need attention now. Perhaps an independant body needs to be set up to look at public funding? Someone who can steer funds to where they need to be and check that they are getting there - all ministries seem to be intrinsically flawed at doing this! I think this is probably because ministers and politicians are not professionals in their fields, they merely hold a short tenure.

    We need to invest in our future growth, we need to recapitialise our dwindling engineering and manufacturing sectors - these will be essential to the nations recovery. I think we should also invest in our R&D sector - as the UK we have some of the finest engineering minds in Europe, we also have some of the best inventors and innovators, these will be of great help on the road to recovery. Whilst financial services will always play a role I think that the glory days are over for these guys - if not over then certainly they will not be generating the same revenue and tax streams as before

    I believe we need to strive together towards being more self reliant for our goods and services. Globalisation has its place and we have our place within it, yet we must not let ourselves become incumbent on other countries for all of our needs. Wealth creation is what is required and this must stem from production of goods or services and not from high risk financial gambling (as we have seen)

    Anyway - this is just my two-pennies (although i'd rather have two euro-cents at todays exchange rate! :-)

    BTW - first post so be easy chaps......

  • Comment number 96.

    Brown's mantra "we have a plan unlike the tories"All because he is angry that the Tories dont agree with his foolish /ill conceived /masive debt for future generations plans.
    The Germans have had enough listening to Brown saying that he is saving the world and its economic problems.
    We are doomed financially because of Brown's eleven years of wasting taxpayers monies .When that ran out is counting on taking more and more of taxpayers monies for decades to come.

  • Comment number 97.

    Can you all stop quoting from The Economist and other US publications. "SuperGordon" says its all due to the Americans fault that we are in this mess so should we even import such publication. Plus of course such imports will cost more as the Pound is so low. Or should you spend more "SuperGordon" says you should.

    No one is reading this are they

  • Comment number 98.

    Interesting article in the Telegraph today also about Brown not blaming the US but should start looking at the man in the mirror - there's a song there somewhere - by Irwin Stelzer

    How dare these people start talking against our great leader! Send in the anti-terror police!

  • Comment number 99.

    I am a German watching the comments by Peer Steinbrueck in disbelief. How can a minister of this German government seriously criticise the British Government when he and his fellow government members should really reflect on their own failings.
    In my view the British government has put forward more convincing measures and has acted more decisively than the German government.
    Angela Merkel's government has to answer for effective decreases in net salaries and growing national insurance burdens. But now she is still "thinking" about the crisis instead of acting.
    Its the old story of allowing politicians to manage a challenge when its really experts that are needed. Based on my chances to follow British politics while living in the UK, I would certainly credit Gordon Brown with more expertise in economics than the current German government.

  • Comment number 100.

    It would appear that Germany does not want to be part of a world saved by Gordon Brown.

    Who can blame them?

    The only thing Gordon Brown wants to save is his own job and is prepared to sacrifice a generation of his fellow countrymen to do it.

    Who does that sound like?

    We should listen to the Germans as they have had direct experience of that sort of meglamania.


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